$2 Billion Lawsuit from German Patent Troll Might Surprise You, but It Shouldn't

It's the intellectual property world we live in: companies that do nothing but buy and sell patents try to get rich quick in court by bullying the actual innovators and technology leaders. When one of these patent trolls files a multi-billion dollar lawsuit against Apple over technology that was originally invented for car phones, is it a sign that the problem has really gone too far?

IPCom GmbH vs. Apple

The Wall Street Journal reports that IPCom GmbH, a German-based company whose sole purpose is to buy patents and then use them to sue companies, has decided it has the winning ticket and is taking Cupertino to court for the whopping amount of €1.57 billion ($2.12 billion).

The patent in question was originally issued to an early innovator in German car phones, Robert Bosch GmbH. It covers technology that prioritizes and routes emergency calls on mobile networks. By allowing emergency calls to get through when networks are overloaded, the technology is essential to first responders, and is a required feature of the UMTS and LTE cellphone standards.

Robert Bosch GmbH sold the patent to IPCom GmbH in 2007. Last month, the European Patent office validated the patent — despite vigorous arguments from Apple, Nokia, HTC, Vodafone Group PLC and Ericsson — and IPCom GmbH decided the time was ripe to go after Apple for a cool $2 billion.

We should give them their own bank.

This business of buying and selling ideas allows a company like IPCom GmbH to exist and prosper without ever really doing anything except eventually finding a winning patent. Formally known as a "patent assertion entity," this type of organization is commonly referred to as a "patent troll." While claiming to defend the original inventor from being abused by the big companies, in reality patent trolls inhibit and block innovation by burdening existing companions with reckless lawsuits and threatening smaller companies out of existence.

"Trolls exist for no other purpose than to buy thousands of patents and prey on companies who don't understand or lack the resources to fairly participate in our complex patent legal system," Black wrote. "Such frivolous lawsuits have cost companies billions in legal fees and payouts; one study found that companies paid out more than $29 billion to settle these suits in 2011 alone."

This latest case against Apple was filed in a German court, and since the European Patent Office already determined the patent was valid, it seems likely that this troll will prevail to some extent.

Will IPCom GmbH collect $2 billion because Apple (and every other company utilizing LTE) allows their devices to prioritize emergency calls? That final call rest with the Manheim court.

We can only hope that some sanity prevails, and shake our heads that we're stuck in a place where trolls often walk away with pockets full of treasure, laughing all the way to the bank.